Leo Melamed: Escape to the Futures

Commodity Futures have been called "The Last Great Frontier of Capitalism". A characteristic of frontiers is that they produce interesting people. But while we know a good deal about the interesting people in other industries - Bill Gates in software, for example, or Peter Drucker in management consulting - until recently the public has heard little of the human side of the futures business. A few years ago a remarkable book was published by the options trader Jack Ritchie called God in the Pits - Confessions of a Commodities Trader. The book had much to say about author's spiritual journey and little about the financial markets in Chicago, but he described his motivation for writing the book as follows: "...the common stereotype is that integrity and commodities trading go together like Al Capone and Mother Teresa. While they are seldom accurate, neither are common sterotypes completely erroneous".Escape to the Futures goes a long way towards dispelling that stereotype, and therefore is a most overdue book. It is the memoirs of Leo Melamed, a former Chairman of the Chicago Mercantile Exchange (known in the commodities world as simply "the Merc") and one of the more important figures in the Chicago financial markets. As well as being better known than Ritchie, Melamed has more to say about his industry. One comes away from the book with an impression of the heroic qualities of the markets as well as an appreciation for the pioneering men who made this new frontier possible. The book's title refers to Melamed's origins. Like that other well known investment figure, George Soros, Melamed is of European Jewish extraction - he was born in Poland. His family managed to escape the Holocaust by fleeing, first to Lithuania, then, barely escaping the Nazi occupation of that country, emigrating to the United States via Japan (pre Pearl Harbour) after a long train ride across the Soviet Union. The twists and turns of this exciting story hints at the origins of Melamed's succ! ess. As Soros has said, describing his experience in the Budapest of 1944: "I learned the art of survival...that has had a certain relevance to my investment career"Like many careers prior to the arrival of post-industrial society, Melamed's began by accident - he answered an advertisement for a "runner" for what he presumed was a law firm but was in fact a member firm of the Merc. He quickly fell in love with the market: " I was enthralled with the open outcry system of buying and selling contracts, with the speed at which things happened, with the colorful players in this arena of capitalistic hope and sweat." (p.88). This appreciation of what Keynes called the "animal spirits" of capitalism seems to be decidedly lacking these days. In the 1990s, if one want's to be a "player" in the financial markets, the correct route seems to be via a bachelor's degree in business followed by some high-priced graduate study, an MBA or something. Contrast this with the advice the young Jimmy Rog